Global iron-ore production growth will accelerate in the coming years, predicts Fitch Solutions’ Country Risk and Industry Research. The firm forecasts that global mine output growth will average 3.6% over the 2021 to 2025 period, compared with a negative 2.3% over the previous five years. This will lift yearly production by 571-million tonnes by 2025, compared with 2020 levels.
Supply growth will be primarily driven by Brazil and Australia. Brazilian miner Vale has aggressive expansion plans, while miners in Australia, including BHP Billiton, Rio Tinto and Fortescue, will re-invest currently buoyant profits into additional production.
In China, iron-ore production will rise once again in the next three to four years as the country works to increase its self-sufficiency and reduce Australian imports. Fitch Solutions expects Chinese mining companies to prioritise investment in overseas iron-ore mines, such as the Simandou deposit, in Guinea.
Looking beyond 2025, Fitch Solutions expects lower prices will eventually drag on production growth rates. The firm, therefore, forecasts yearly production growth to average just 1.1% over 2026 through to 2030, with output levels expected to stagnate by the end of the decade.
India’s iron-ore output growth will be supported by the removal of export taxes in the Union Budget for low-grade ores and the country’s Mines & Minerals (Development & Regulation) (MMDR) Act, which will streamline licensing and reopen closed mines.
Although the MMDR Act will support ore output growth, the royalties included in the Act will limit the sector’s overall growth potential. As part of India’s 2016 Union Budget, export duties for iron-ore lumps and fines below 58% iron content were reduced to nothing from 30% and 10%, respectively.
This reduction was aimed at boosting shipments from the western state of Goa, where the Supreme Court lifted an earlier iron-ore mining ban. However, the decision by India’s top court to cancel all iron-ore permits in Goa in February 2018 will mean that production from that state is likely to head lower rather than increase. As a result, Fitch Solutions forecasts India’s iron-ore output to grow from 174-million tonnes in 2020 to 194-million tonnes in 2030, with yearly output growth averaging 1.1% over the period.